When you are ready to purchase a home, there is a whole lot of terminology that you need to work through. When it comes to getting the money you need to purchase a home, you are going to have to work with a lender. The truth is though that there are lots of different types of mortgage lenders you can work with.
Wholesale Lenders
Wholesale lenders are companies that finance a variety of different loans but don't actually work directly with the public. Instead, they work with individual mortgage brokers, as well as other banks and credit unions, offering behind the scenes financing. They provide the money for the loan, and the borrower pays them back, but they leave all the face-to-face handling of the loan to brokers, banks, and credit unions who connect their products with individuals who are interested in using them.
You will not deal directly with the wholesale lender, but you will see their name on your loan documents. The broker, bank, or credit union that is helping you with your loan application is an agent who is being paid a fee for facilitating the loan for the wholesale lender.
Retail Lenders
Retail lenders work differently than wholesale lenders. With retail lenders, you are working directly with the lender. The mortgage agent you helps you out works directly for the lender that you are working with; they are one and the same.
You know you are working with a retail lender when the name of the company you are working with, and the name of the company you are borrowing the money from, are the same on the loan documents.
Portfolio Lenders
Finally, there are portfolio lenders. Portfolio lenders offer a unique lending solution. Instead of borrowing money from a bank or a large institution, you are borrowing money directly from an individual or group of individuals that finance home loans as part of their own investment portfolio. They are taking an investment risk on you.
With portfolio lending, the loan terms are often much shorter, so you need to be ready for very different loan terms if you want to go with this lending route.
When it comes to getting a loan to finance the purchase of a home, there are a wide variety of different lenders that you can work with. You can work with a mortgage broker who will connect you with a wholesale lender. You can work directly with a retail lender, such as a bank. Or you can try your luck with portfolio lenders, who often set their own lending and loan standards that are different from the rest of the market.
Share1 October 2019
I always wanted to buy my own home and after saving enough money for a down payment, I decided that it was time. Before I started looking at houses, I talked with a loan officer about financing. I wanted to know how much money I could borrow so I could look at houses in that price range. I was very happy after my meeting at the loan company and I was ready to start house hunting. My name is Jarod Spangler and I'm now a homeowner. If you have the dream of owning your own home, I think you'll find my blog of help to you. I've documented my journey of saving money, securing a loan and purchasing a house. To help you become a homeowner too, I'm offering advice and tips of things that I've learned along the way.
